Academies - Funding Reforms

20 October 2016

With the uncertainty following the result of the EU referendum and the appointment of Justine Greening as the new Education Secretary, academies are keenly aware that funding reforms are on the horizon.  Whilst the new national funding formula is uncertain, budget pressures mean it is important to consider and plan for what potentially lies ahead. 

Key points to consider:

  • What changes do you anticipate?
  • Are your financial plans robust?
  • Are you confident about the impact of previous efficiencies?
  • Can you identify further efficiency savings?
  • Is your leadership team fully engaged in making savings decisions?

Good budget planning will help identify potential shortfalls.  We recommend a 3-year budget plan which indicates the effect of short term costs on the long-term improvement of the academy’s financial health.  The first year is spent on budget planning and ensuring staff, governors and unions are on board, with changes implemented gradually in years 2 and 3.

Where significant savings are required, it is often unavoidable to consider changes to the staffing structure and it is crucial that you engage early with HR where potential redundancies may be necessary. 

Initial focus should be on areas such as:

  • Where you may be over or under staffed
  • Where natural changes to staffing are likely; such as retirement or where staff are more likely to move on
  • The Senior Leadership Team structure; can it operate effectively with fewer members if some responsibilities were managed by more junior staff?
  • Do the working patterns of support staff match the schools needs and is their time used effectively?

Other potential cost savings include:

  • Buying through consortiums and energy brokers to benefit from economies of scale
  • Joint procurement between groups of schools
  • Consideration of cloud based computing 
  • Switching from written and postal communication to email and text messaging
  • Income generation from lettings, events, outsourcing after school provision
  • Possible expansion (additional pupils)
  • Check sixth form hours v funded hours (are you subsidising the sixth form?)
  • Utilise Cover Supervisors where possible instead of Supply Teachers
  • Reduce inventory of staff computers and printers
  • Manage staff culture, focusing on team spirit and driving down absence – could an occupational health provision help?
  • Investment in new LED lighting or other green energy provision for long term savings?*
  • Consideration of joining or establishing a MAT for benefits such as centralised services, sharing best practice, flexible staffing resources and more opportunities for staff

* the EFA quote a case study of a school spending £15,000 on new LED lighting, which is expected to cut the yearly energy bill from £22,000 to £10,000. As the lighting comes with a 5 year warranty, they expect savings to amount to £60,000 over 5 years and reduce their carbon footprint.

All budget planning documents should be straightforward and transparent, presenting potential savings scenarios as clearly as possible, so a non-financial audience can carry out their roles effectively.  It is also crucial to ensure good channels of communication between staff, governors and parents to aid understanding of changes being considered.

If you have any questions, specialist Partners at MHA MacIntyre Hudson can advise and support you.

For further information, or an informal discussion, please contact us.

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